Texas’ two warring political parties often focus on policy differences during campaign season. But interestingly, there’s consensus on an issue near and dear to Texans — making the property tax system more fair and less complicated.
As Republican Party delegate Scott Bowen pointed out recently, Texas’ two political parties agree on many issues, including two planks related to property tax reform.
The first item concerns ending Chapter 313 property tax abatements, which are carve-outs for businesses that allow all or a portion of a property’s value to be exempted from property taxes. While public school districts may offer these to companies, the state is obliged to pay for what was given away by the local district. You can find a complete list of Chapter 313 abatements offered by school districts to companies online.
Both parties’ platforms call for these special interest carve-outs to be eliminated. The Democrat platform recommends “eliminating tax loopholes and unproductive special breaks, such as Chapter 313 agreements, to simplify the tax system and provide revenue for essential services.” Republicans “support repealing Tax Code Chapter 313 school property tax abatements.”
It’s worth noting the law also allows cities to offer property tax abatements under Chapter 312.
The second overlapping plank on tax reform relates to the state’s unpopular Chapter 41 Wealth Equalization program, also known as “Robin Hood.” The unfair scheme forces property owners in certain “property rich” districts to pay more in school taxes than what’s needed to fund their local schools. A portion of their tax payments are “recaptured” by the state and redistributed to other districts.
In 2018, Texans paid $2.1 billion in Robin Hood taxes. Both parties’ constituents are unhappy with the program, and call for it to be phased out or eliminated.
The Democratic platform calls for the state to “equitably reduce reliance on ‘Robin Hood’ recapture.” The Republican platform goes a step further, stating that Republicans “oppose the ‘Robin Hood’ system of public school finance and believe the Texas Legislature, not the courts, should determine the amount of money spent on public education and the distribution thereof.”
At the 2018 Republican Party of Texas convention, delegates named the abolition of the school property tax a top five priority for the 2019 legislative session. If the school tax were abolished, Robin Hood would also be eliminated.
Once fully repealed, taxpayers in recapture districts could pay far less in school taxes without cutting funding to local schools. However, the state would need to find billions in revenue elsewhere to offset the taxes collected by the program.
The Texas Public Policy Foundation recently released a report detailing a solution. If state lawmakers cap the state’s budget growth at four percent per year — and dedicate 90 percent of the surplus to lowering school property taxes — the Robin Hood tax could be phased out in 10 years.
By the 11th year, the entire school tax for maintenance and operations (M&O) could be abolished, cutting the average Texan’s total property tax bill by 40 percent or more.
It’s no secret Republicans run the legislature, and have the power to pass any bill they want. But with Democrats and Republicans agreeing on ending “Robin Hood” and special-interest carve-outs, lawmakers who claim to value bipartisanship have no excuse for failing to act in 2019.